A TAX INCENTIVE FIRM

COSMETICS

RESEARCH AND DEVELOPMENT TAX INCENTIVES FOR THE COSMETIC INDUSTRY

The positive performance of the cosmetics industry has been corroborated by the expansion of thriving technologies, such as bio- and nano-tech, and the increasing demand for certain segments of products, including organics, anti-aging, and male grooming. The following paragraphs will present recent breakthroughs and outstanding challenges in some of the most promising fields for cosmetics R&D.

1. Organic and Bio-based Cosmetics

The growing demand for bio-ingredients has played an important role in the cosmetics market. Fueled by increasing health concerns and ever more discerning consumers, natural and bio-based technology is expected to be major drivers of future growth.

The innovative use of bio-ingredients is an important area for cosmetics R&D activities. Organic and natural products are increasingly popular and many companies are taking advantage of the pro-natural trend. For now, however, they remain a small percentage of the market. Improved R&D will be necessary before these products achieve cost-effectiveness while complying with safety regulations. One of the major challenges is replacing artificial preservatives without compromising efficacy and safety.

2. Nanotechnology Advancements in Cosmetics

Nanotechnology is increasingly used to enhance the power of cosmetics, specially sun care and anti-aging products. Nanotechnology is the science of manipulating matters on a molecular or atomic scale. In other words, what characterizes this branch of technology is its focus on extremely small dimensions and tolerances - less than 100 nanometers (billionths of a meter).

R&D efforts aimed at taking advantage of nanotechnology to develop new and improved cosmetics are bound to intensify in the near future. Clarifying the effects of nano-enhanced cosmetics and the potential health risks involved are also important areas of research. 3.

3. Biotechnology Innovations

Biotechnology can be defined as technology based on biology. It leverages cellular and biomolecular processes in the development of products and technologies. Modern biotechnology has enable major breakthroughs in the fight against rare diseases, the development of more efficient industrial manufacturing processes as well as in the reduction of the environmental footprint.

In the world of cosmetics, biotechnology has played an important role in the creation of innovative products and processes. The development of alternatives to oil-sourced ingredients is a promising field for biotech cosmetics innovation. Cosmetic manufacturing increasingly incorporates the notion of "biorefinaries", in other words, they rely on renewable resources such as farmed, marine, and forestry biomass, and follow the principles of green chemistry.

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4. Anti-aging

The use of stem cells is a vibrating field for anti-aging research. Stem cells are responsible for renewing and repairing the epidermis, dermis, hair, and nails. They are rare cells, which possess impressive capacity for proliferation. Due to their very nature, stem cells can revolutionize anti-aging treatments. Research has focused on protecting the environment of stem cells in order to counter their natural loss of regenerative potential that happens with age. Similarly, researchers have aimed at preserving the stem melanocytes and keratinocytes present in the hair, which diminish with time causing graying and hair loss.

Significant R&D will be necessary before the full potential of stem cells in anti-aging treatments is realized. Still experimental and controversial, the use of stem cells seems, however, to be an unavoidable piece of cosmetics innovation.

5. Men's Grooming

The increasing demand for male grooming products is an important driver of growth in the cosmetics industry. The fast-growing market of men's grooming experienced a 7 percent growth in 2012, with sales adding up to $34 billion last year. From anti-aging creams to energyboosting serums and body lotions, men are beginning to incorporate the use of cosmetics in their everyday routine. They have shown a rising interest in personal appearance and have grown comfortable using beauty products. For the first time in history, sales of men's toiletries were expected to surpass those of men's shaving in 2013.

Men tend to spend limited time in grooming, therefore the importance of simplicity and multifunctionality. Recent R&D efforts have focused on blurring the boundaries between categories. Examples include aftershave and shaving products that offer hydration and anti-aging properties. While demand for makeup for men is still restricted to Asia, innovative efforts have edged into this area in the Western world. Estee Lauder, for instance, has developed a BB Tinted Moisturizer with solar protection, a multifunctional corrective and restorative product.

6. Innovative Packaging in Cosmetics

In the cosmetics packaging segment, the ability to meet consumers' needs of convenience and performance must be associated with affordability and sustainability. To that end, packaging manufacturers are developing creative solutions and innovative technologies specially targeted at cosmetics.

R&D efforts are underway to incorporate organic and biopackaging into the cosmetics market. New materials, such as plant-based biopolymers, are a promising field for innovation. While most available alternatives are made from corn, research is taking place to enhance potato starch for bioplastic production and to foster the use polymer-producing bacteria.